When Journalists Believe They Are VCs, Beware

The “bubble” question is never far from the tech sector’s collective lips: the fear that the whole startup boom is nothing more than a crescendo of poor investments that will burst, leaving investors with nothing.

Bubble-ists got a boost to their cause with the news late last night from Silicon Valley of a new investment fund, one of whose partners, Ben Parr, is a former editor at the Mashable blog and now writes a column for CNET. Journalists becoming venture capitalists?

Called #DominateFund (yes, hashtag included), the fund’s general partners are Ben Parr, former editor at large at Mashable, as well as Matt Schlicht and Mazy Kazerooni, the cofounders of digital music marketing startup Tracks.by. The fundraising is still in its early stages, and like many first time funds, has a target in the “single-digit millions,” according to people familiar with the fund.

The financier James Goldsmith famously avoided the 1987 stock market slump, the story goes, after being asked by a waiter in Paris in which stocks should he invest. When waiters are asking for stock tips, get out of the market, so the story goes.

Such a maxim should be updated for our times. When journalists give up their penny-a-line trade and think they are financiers and business executives, you are in a bubble.

I speak with some personal experience. Having spent several years in the late 1990s reporting for London’s Daily Telegraph on the first dotcom boom, I decided it was time to join in the gold rush. I resigned.

Between giving my notice and leaving the paper a few weeks a later to embark on my road to multimillionaire-dom, the startup I was due to join collapsed, felled by the ill-fated (but at the time we all believed “epoch-making”) AoL-Time Warner merger.

I did end up at another startup (or dotcom, as we called them in those days). It failed.

There are some journalists who have successfully crossed over. Natalie Massenet was a fashion journalist at Vogue who set up Pret a Porter; Nick Denton left the Financial Times to set up Gawker. Both have proved successful.

Nor is Mr. Parr the first to try his hand at being a VC. The most well-known example is TechCrunch founder Mike Arrington, a larger-than-life figure in the Valley community. However, he is a lawyer by training and repeatedly made it clear that he never considered himself a journalist.

Football journalists don’t tend to make great strikers (although some strikers do make good football journalists). Reporting about startups requires very different skills to actually running one, or advising others on how to run theirs.

We wish Mr. Parr and his team of neophytes well, but he has a lot of work to prove that writing about startups in any way prepares him for the very different life as a VC.

I hope Mr. Parr has as indulgent an editor as I had. As I was leaving his office, having smugly given in my notice, the editor’s parting shot was, “When it all goes wrong, give me a call.” It did — so I did.

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Tech Europe covers Europe’s technology leaders, their companies, and the people and industries that support them — and their ideas. The blog is edited by Ben Rooney, with contributions from The Wall Street Journal and Dow Jones Newswires.